are given below The direct materials and direct labour standards for one bottle
ID: 2516108 • Letter: A
Question
are given below The direct materials and direct labour standards for one bottle of Clean-All spray cleaner Standard Quantity Standard Price Standard Cost $ 1.62 $ 3.60 or Rate Direct materials Direct labour or Hours 6.0 millitres 027 per militre 0.3 hours 12.00 per hour During the most recent month, the following activity was recorded a. 21.000 mililitres of material was purchased at a cost of $0.22 per millilitre b. All of the material was used to produce 3,000 bottles of Clean-All c. 675 hours of direct labour time was recorded at a total labour cost of $8,100 Required: 1. Compute the direct materials price and quantity variances for the month (indicate the effect of each variance by selecting "F for favourable,"U" for unfavourable, and "None" for no effect (i.e., zero variance).) Materials price variance Materials quantity variance 2. Compute the direct labour rate and efficiency variances for the month. Indicate the effect of each variance by selecting "F for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Labour rate varlanceExplanation / Answer
1.
Materials price variance = Actual quantity * (Actual price - Standard price)
= 21,000 * (0.22 - 0.27)
= 1,050 Favourable
Materials quantity variance = Standard price * (Actual quantity - Standard quantity)
= 0.27 * [21,000 - (6*3,000)]
= 0.27 * (21,000 - 18,000)
= 810 Unfavourable
2.
Labour rate varaince = Actual hours * (Actual rate - Standard rate)
= 675 * [(8,100/675) - 12]
= 0 None
Labour efficiency varince = Standard rate * (Actaul hours - Standard hours)
= 12 * [675 - (3,000*0.3)]
= 12 * (675 - 900)
= 2,700 Favourable
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